HEDGE ENERGY

“It really only takes one bad season for that whole equation to change around. And that's really the worry in the coming months, that if we see some troubled weather potential as well... we will see downgrades to crop production targets for this year. And that will start to eat into an overhanger supply because we are coming into this, just like the oil market, we're coming into this fertilizer crisis with ample supplies of some of the key crops.”

“Having the CEOs of the companies you are meant to regulate sitting in the West Wing effectively means the industry is writing its own rulebook.”

“I think seeing oil prices fall below $75 a barrel by the end of the year is pretty unlikely, even if this conflict wraps up very quickly. When we entered 2026, there was this broad expectation that this was gonna be a pretty soft market, that there was going to be an imbalance in supply over demand. That has all changed now. The size of the physical disruption that we've seen so far is gonna create constraints on supply going through the next twelve months.”

“You should not build a portfolio based on dividends. Dividends can be a piece of the puzzle because it alludes to something. The ability of a company to pay a consistent dividend is a good sign because of what it says about the company. But I've had this conversation with countless people. They feel as though they are earning something when they get a dividend. This is passive income by getting a dividend, and that's just not the case. If a company pays out a cash dividend, its price should drop. So you are trading optionality for an income stream. If you want an income stream, invest in bonds.”

“When it started, my worst case scenario was that this could end up being a US Suez 1956 moment. And now, seven weeks in, Hormuz is still closed. Supply chain issues are just now really starting to stack up. I think where this is all headed is forcing the US into a choice. I think it means we're forced to pull back or we're forced to print money into an oil spike to contain the bond market, or we let rates rise in a recession and an oil spike and let the economy take the hit.”

“The old world is striking back against the new world because the new world wants to accelerate at 100 miles an hour towards progress, but the old world is bumping along at a much lower speed because they can't keep up with the demand that is coming from all the different, all the new technologies and all the direction that we want to go. I think that basically leaves us in a situation where the old saying that the best cure for high price is a high price because it incentivizes supply.”

“The Iranians are trying to show the GCC states and particularly The UAE your model of economic development, this idea that you can turn The Gulf into an island of stability with tourism, with finance, with tech, with hotels, all of that will go away if we keep being attacked. The second reason they're doing this is they are indicating to the GCC that their relationship with The United States is untenable. That so long as they allow The US to have bases in the region, so long as they allow The US to support their security, that from the point of view of Iran, they are US allies, they are US instruments, and that makes them legitimate targets.”

“Despite oil being sustainably above $90 a barrel, US producers are not rushing to drill. Right? The Dallas Fed did a survey which showed rig counts actually declined. Even after, you know, a month of 90 plus dollar oil, oil executives are saying that the price swings are a bit too wild, and they can't really stomach it moving based on tweets and paper market manipulation. It effectively makes it impossible to plan capital budgets.”

“I think there's an argument that once the dust settles and we're on the other side of this, we should expect prices to settle in at least $10 higher level, maybe even $15 higher. The floor has moved higher for this. That basically means if you're looking at Brent Crude for December at $80, that's potentially where the new floor should be. So I'm struggling to see any forward prices really reflect what potential will unfold in the coming months because it will take time.”

“Energy markets are reacting sharply to the ongoing regional instability today.”

“We're witnessing a temporary disruption or the end of a the U.S. unipolar era.”

“The Americans, I think, assume or perhaps elements of the Trump administration assume, oh, if we take Karg, then they have to do what we say because they're gonna wanna export oil again. I think that misunderstands the, let's let's say, psychological characteristics of not only the Islamic Republic but also of the Iranian state. They will respond extremely negatively to US soldiers on Iranian soil. They would rather live under greater financial pressure and an inability to export oil in volume than to capitulate to a US pressure campaign that involves the invasion of Iranian territory.”

“The proposed funding for the climate initiative has become a major sticking point.”

“WTI crew diverse earlier declines to finish up over 3% on the day, just under $100 a barrel.”

“If you have a market which is backwardation, i.e. it's a signal of a relatively tight supply, and you're holding a futures position to hedge your exposure... every time you roll that position, if we are in backwardation, you'll be selling an expiring contract at a higher price where you buy the next. That is giving you a positive roll yield over time. And obviously, the opposite occurs if you have a period with ample supply.”

“Reason we just come to know as well that miners in South America then need sulfuric acids in order to break down the copper from their mines and that basically means with 50 percent of that coming out of the Middle East, then we also suddenly face a potential shortage in that area. We talked about helium has been mentioned prior to the chips industry. So it's just the whole, how the breadth of this crisis and how it impacts not only energy, but anything through to metals.”

“We've gone from a bit of a liquidity and inflation shock, perhaps now more towards a growth shock, where the implications of this crisis will start to play out in the coming months in terms of soft economic growth. And with that also, the central bank struggle business between focusing on inflation on one hand, and perhaps focusing on economic stimulus on the other side. And I think that that will eventually send the gold prices higher again.”

“I've been doing this 30 years in investment research and I've only seen two other times like this that I can recall and the first is in 4Q07, where I was seeing the US economy and financial system collapse in real time. Yet, the equity markets hit an all-time record on the S&P in the fourth quarter of 07. It also reminds me of 1Q20 when obviously with COVID, markets were just sort of blissfully complacent. And then Tom Hanks said he had COVID, and then they shut things down, and the markets absolutely had a fit.”

“SpaceX is no longer a science project; it's the primary infrastructure for the new space economy, and an IPO would be the largest liquidity event in history.”

“A war few expected to last this long is exposing how fragile global systems really are.”

“The view I've had and the view I'm sticking with is, Hormuz is all that matters, and every day that it stays closed, it brings us closer to a non-linear break in supply chains. And my view has been that that's not going to be good for markets, if slash when that happens. That's why I highlighted that Japanese Toilet Maker today, down 7% on the day. If they had gone up 7% or up 10% on announcing that they couldn't make anything anymore because of supply chains, I probably would have to say, all right, well, maybe I'm just not getting this.”

“People in finance are just sort of, well, hey, just hit control P and we'll print oil, or the oil will be where it needs to be, and the fertilizer will be where it needs to be. Because, oh, by the way, on fertilizer, as I'm sure you know, Erik, we're on the clock for a growing season. Like, you're not gonna be throwing fertilizer down in June or July. It's too late at that point. If that happens, like hundreds of millions of people could starve to death.”

“Looking at Air Systems, AEHR. Small cap name, $2,600,000,000 market cap. It has boomed, Luke. It was trading just last April, one year ago. Down around $7 per share. Today, even after dropping 7% today, it's at $82 per share. It's moved, like, 800% in the past fifty two weeks. What about just a month? And then last month, it was trading at 30, and now it's at 82 in a in a month. I'll give you another number. Let's see if you can guess what number it is. 18.7%. Short interest. There you go. So this move is just probably a short squeeze.”

“The old world is striking back against the new world because the new world wants to accelerate at 100 miles an hour towards progress, but the old world is bumping along at a much lower speed because they can't keep up with the demand that is coming from all the different, all the new technologies and all the direction that we want to go. I think that basically leaves us in a situation where the old saying that the best cure for high price is a high price because it incentivizes supply.”

“This agreement marks a significant turning point for international AI guardrails.”

“In the last six weeks, how much has the US crude oil production risen by zero barrels? How many additional rigs has been employed in the US shale area? Zero rigs. Basically, where are the US producers? Why are we not seeing any response? And I think part of that is clearly the fact that the curve is very backwardated. So if you as an oil producer needs to hedge your production three to six months out, the prices are still not that great.”

“Japan's opposition party is calling for increased nuclear plant usage to offset the Iran crisis, and that's highlighting how energy security is becoming a critical investment theme.”

“How little the Iranians have needed to do to Hormuz to keep it shut. They've struck about a dozen tankers. They haven't sunk any as far as I know. They haven't laid more than a few mines as far as anyone is aware. Activity at Hormuz has been pretty quiet because as soon as the war began and as soon as the Iranians said Strait Of Hormuz is now closed, all the shippers stopped. Nothing was moving. The threat was enough to keep it closed, which I thought was surprising.”

“Going into this, there was a belief in the administration and perhaps a belief from the president himself that there was an opportunity in Iran to replicate the experience in Venezuela. That there was a way to kill Ali Khamenei, the supreme leader, and that in the wake of his death, a group of Iranian leaders would come to the fore and would pursue policies that aligned with US interests. Now the problem, which they encountered immediately, was that the individuals they expected to lead that political shift inside Iran were also killed alongside Ali Khamenei in the opening hours of the war.”

“We've gone from a bit of a liquidity and inflation shock, perhaps now more towards a growth shock, where the implications of this crisis will start to play out in the coming months in terms of soft economic growth. And with that also, the central bank struggle business between focusing on inflation on one hand, and perhaps focusing on economic stimulus on the other side. And I think that that will eventually send the gold prices higher again.”

“The Strait of Hormuz and how shifting power dynamics are reshaping global markets and strategy.”

“In the last six weeks, how much has the US crude oil production risen by zero barrels? How many additional rigs has been employed in the US shale area? Zero rigs. Basically, where are the US producers? Why are we not seeing any response? And I think part of that is clearly the fact that the curve is very backwardated. So if you as an oil producer needs to hedge your production three to six months out, the prices are still not that great.”

“China’s quiet advantage is part of the shifting power dynamics we unpack.”

“But the collective understanding of the war initially was that it was going to be a short war because The United States and because president Donald Trump didn't want a long war. So there was this belief that, okay, things are bad. Iran has been attacked. It's being heavily bombed by The US and Israel. It's closing the Strait Of Hormuz. But Trump is gonna deescalate and it's gonna end. That's part of the reason why oil prices didn't really respond as aggressively initially as I think they've responded since.”

“The first revision to Q4 GDP was cut in half, down to 7 tenths of a percent from 1 percentage point... That's not the kind of mix that supports an economic resilience narrative.”

“It's the art of war. The generals tend to fight the last war. And while there's COVID and we did see a little inflation as of the last few years, really, the major crisis of most people's recent memory is o eight, is the financial crisis. And that was a big deflationary impulse. But the previous crisis is usually not the next crisis. The next crisis is usually something very, very different. And in this instance, it really is inflation, that the risk for most people's portfolios is that inflation continues to eat away purchasing power.”

“Goldman Sachs has estimated the Persian Gulf crude output is down 14,500,000 barrels per day. That's 57% lower than prewar levels. And you even started to see Saudi Arabia, you know, OPEC's defect de facto leader, try and maximize outs output through its alternative Red Sea pipeline, but it doesn't really handle the full volume there. And so in a situation where the way to move oil to market is shut down for OPEC, of course, The United States then becomes a even more important producer of oil in the global economy. And total US oil exports earlier this month hit an all time high of 12,900,000 barrels per day.”

“If you have a market which is backwardation, i.e. it's a signal of a relatively tight supply, and you're holding a futures position to hedge your exposure... every time you roll that position, if we are in backwardation, you'll be selling an expiring contract at a higher price where you buy the next. That is giving you a positive roll yield over time. And obviously, the opposite occurs if you have a period with ample supply.”

“I think it comes down to in this context, he is maybe more conscious of looking weak than taking the taco and taking the the the short term win and seeing the economic indicators, the financial indicators swing back in his favor. If he does back down right now, it feeds directly into the Iranians' narrative of victory. This sense that Iran is tougher, more resilient, more able to withstand pain, and that eventually they will outlast not only The United States, but more specifically The US president.”

“Reason we just come to know as well that miners in South America then need sulfuric acids in order to break down the copper from their mines and that basically means with 50 percent of that coming out of the Middle East, then we also suddenly face a potential shortage in that area. We talked about helium has been mentioned prior to the chips industry. So it's just the whole, how the breadth of this crisis and how it impacts not only energy, but anything through to metals.”

“Markets may be underestimating cascading global disruptions.”

“We are currently advising the public to take standard precautions against the surge.”

“One of the big issues really is that this is it's a furniture store. They own Pottery Barn, West Elm, obviously Williams Sonoma. And that is, it's typically a good business, but usually the spark to buy new furniture is buying a home. And home transactions remain near multi year lows. So until we get a catalyst that can improve the amount of home transactions that are being made, it's going to be difficult for them to manufacture a lot of real revenue growth here.”

“Looking at Franco Nevada. This is the name that we've actually owned for clients for an extended period of time. This is a streamer. What they basically do is they partner with the mining companies and they help finance the mines. So they basically own a piece of on a stream of the revenue coming out of the from the mines. We have zero debt. We have absolutely zero debt. So it is the purest, cleanest gold price proxy amongst these gold exposed names.”

“Americans in general are feeling a little bit less confident in their ability to retire. 61% of workers are very or somewhat confident in having enough money for retirement. That's down from 67% last year and a recent high of 72% in 2021. That's the lowest level in nearly a decade. And most people are focused on inflation. Among retirees, 41% said that retirement spending had been higher than they expected when they first retired.”

“It really only takes one bad season for that whole equation to change around. And that's really the worry in the coming months, that if we see some troubled weather potential as well... we will see downgrades to crop production targets for this year. And that will start to eat into an overhanger supply because we are coming into this, just like the oil market, we're coming into this fertilizer crisis with ample supplies of some of the key crops.”

“Middle East has obviously expanded its production base. Why just sell oil out of the ground and send it on the ship when you can actually make some money on the process of refining these into other areas. That's why we suddenly left with a market where besides gas, we have all the associated productions of commodities... the energy intensive commodities, that's anything from aluminium to especially fertilize which requires a lot of gas with the main feed stock.”

“But this war, this attack was interpreted by Iran as a threat to its survival, a threat to the regime's survival, and it responded in a way that it has been saying it would respond for a long time. So I have been shocked, but if I were a better Iran and energy analyst, maybe I shouldn't have been.”

“Go back to the history of Micron's earnings. I will read them from 2020 to $2,027.37, $5.14, $7.74, negative $5.34, 70¢, $7.59. So I think the question is not are earnings real today, but are they sustainably real moving forward, or are we just at a point in time where things are at the right position cyclically? The last peak in earnings for Micron was $8.35 in 2022. So analysis to earn over 10 times that next year. It's just not likely to be durable.”

“I mean, Joe, you mentioned the damage done to the the Qatar facility last night. That was, I believe, one missile that got through and caused enough damage that they'll have to keep the facility off for a long time and has now cut production for years to some extent. And so that's that's one missile. And they could I think they could do more if they wanted.”

“We have to look past the daily headlines and realize the sheer capital being incinerated in this conflict is a massive tax on global growth.”

“Middle East has obviously expanded its production base. Why just sell oil out of the ground and send it on the ship when you can actually make some money on the process of refining these into other areas. That's why we suddenly left with a market where besides gas, we have all the associated productions of commodities... the energy intensive commodities, that's anything from aluminium to especially fertilize which requires a lot of gas with the main feed stock.”

“There's overwhelming evidence to suggest that most Iranians don't support most of the policies that the regime pursues. The other aspect of this and, you know, this is it's not a uniquely Iranian story. Decades of repression and, you know, monitoring, political dissent, restricting the political environment. What that means is that there's really no organized political opposition inside Iran. There's no, you know, opposition candidate or opposition leader who's, you know, fighting the good fight.”

“I think there's an argument that once the dust settles and we're on the other side of this, we should expect prices to settle in at least $10 higher level, maybe even $15 higher. The floor has moved higher for this. That basically means if you're looking at Brent Crude for December at $80, that's potentially where the new floor should be. So I'm struggling to see any forward prices really reflect what potential will unfold in the coming months because it will take time.”

“I think what people don't understand is the last tanker to transit successfully on February 28th before all of this stuff started, that Hormuz oil will arrive at its destination next week. That's how long it takes for oil that's flowing through the Strait of Hormuz to get to where it's going. So there hasn't been any supply disruption yet. And the actual disruption of supply hasn't even started yet. You don't just call up the captains of those VLCCs and say, hey, engage your warp drive and get to Asia in a week instead of a month and a half.”

“The latest data shows inflation staying stubbornly above the two percent target.”